Strategic sources of superprofit in a well-regulated fishery

This study is motivated by the ongoing debate on resource rent taxation in Norwegian fisheries. Drawing on strategy literature, this paper argues that resource rent is just one of several conceivable sources of above-normal profit (superprofit) for a firm in a natural resource-based industry. The financial statements of almost the whole population of the Norwegian purse seine fleet were analyzed (61 firms owning 65 vessels) for a 5-year period and the level of superprofit for each company was calculated. The findings show that the average firm made modest superprofit in 4 out of 5 years. One reason is that the firms have received a large portion of their quota portfolios gratis. Another reason is that the competition arena is favorably protected through institutionalized barriers to entry. Moreover, the study reveals large profitability variations among seemingly similar firms. Different sources of superprofit were therefore investigated. It was found that the most profitable firms were the most risk adverse. They invested in neither large quota shares nor large catch capacities; as a result, their balance sheets were not debt loaded. The paper concludes by discussing policy implications and limitations of the findings.